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August 18 and 19, 2004
State Capitol, Room 302
Cheyenne, Wyoming
Senator Robert Peck, Co-Chairman
Representative Roy Cohee, Co-Chairman
Senator Jim Anderson
Senator Dick Erb
Senator Rae Lynn Job
Senator Jayne Mockler
Representative Rodney “Pete” Anderson
Representative Kurt Bucholz
Representative Pat Childers
Representative Lorna Johnson
Representative Tom Lockhart
Representative Saundra Meyer
Representative Bill Thompson
Representative Jane Wostenberg
Mark Quiner, Assistant Director
Dean Temte, Fiscal Analyst
Please refer to
Appendix 1 to review the Committee Sign-in Sheet
for a list of other individuals who attended the meeting.
Co-Chairman Cohee called the meeting to order at 8:30 a.m. The following sections summarize the Committee proceedings by topic. Please refer to Appendix 2 to review the Committee Meeting Agenda.
Mr. Dean Temte, Legislative Service Office, gave extensive information prepared by him and Mr. Don Richards, Legislative Service Office, on the distribution formula for severance taxes, FMRs, fuel taxes and sales and use taxes (see Appendix 3).
Mr. Joe Evans, Director of the Wyoming County Commissioners Association, provided information on the distribution of state and federal revenues to counties (see Appendix 5). Mr. Evans provided extensive information on county expenditures and revenues by category.
Mr. Lloyd Peterson, Goshen County Commissioner, provided information on the dire needs faced by Goshen County. He explained Goshen County is in its seventh year of drought and how difficult it is to raise the matching funds required by the State Lands and Investment Board to obtain state grants and loans.
Mr. Rick Miller, University of Wyoming, indicated the University does not receive any severance tax, but it does receive federal mineral royalties which UW spends and obligates through bonded indebtedness.
Mr. Ken Kerns and Ms. Ky Dixon, both representing Sheridan County Board of Commissioners, explained they have studied revenues owed to Sheridan County through sales tax that does not reach Sheridan County through the distribution formula (see Appendix 6). Mr. Kerns estimated there is a $1 million deficiency in revenues owed to Sheridan County that have not been received from coalbed methane development.
Mr. George Parks, Executive Director of the Wyoming Association of Municipalities, explained the revenue distribution formula and how it is serving the needs of the state (see Appendix 7). He provided extensive information on the expenditures and needs of municipalities in this state. He indicated that even with the increase in revenues from the state, with de-earmarking the municipalities are down around $3 million in revenues.
Mayor Gomez, Green River, Wyoming, gave the Committee information on state revenues from a municipality's point of view (see Appendix 8). Mayor Gomez indicated that two-thirds of Wyoming residents live in cities and Green River has a five-year infrastructure plan, but it is lagging now due to reduced revenues. He indicated Sweetwater County residents have taxed themselves for a water plant, jail and schools and have had the option of a one-cent tax for a decade. He also provided information on how de-earmarking has specifically affected the City of Green River.
Mr. Tom Forslund, Casper, Wyoming, gave information on the new federal accounting requirement entitled Gasb No. 34. He also provided information on the needs of municipalities for street maintenance and repair and gave information on user fees generated for enterprises such as garbage/sewer collection, etc. He indicated there is a need for some sort of predictability for state revenues for long-term planning purposes.
Ms. Colleen Peterson, City of Rock Springs, indicated they do build depreciation costs into their sewer and water rates and try to bill for that to build up reserves to replace those assets when needed.
Ms. Jody Gering, Laramie City Council, indicated de-earmarking has meant a decrease in funds for the City of Laramie. The city has had to cut any raises or step increases for employees, there has been no raise in health insurance, and their police force is the lowest paid in the state. She indicated the money received from the state was appreciated and did help, but has been insufficient to totally meet their needs.
Mr. Randy Adams, City of Torrington, indicated the City of Torrington has serious problems. The infrastructure is in trouble and the city is barely able to maintain the infrastructure at this point. There are serious water problems with nitrates and the city has had to tap into its reserves to keep municipal operations going.
Mr. Michael Walden-Newman, Wyoming Taxpayer's Association, stated the Committee should discuss the distribution formula in future meetings. He indicated cities and counties should be treated separately since they have different needs. He indicated the spending part of the equation should also be reviewed.
Mr. Marion Loomis, Wyoming Mining Association, provided an update on uranium issues (see Appendix 4). Mr. Loomis explained the history of severance taxes for uranium in this state. As of June 2004, the price of uranium reached $18 per pound and the industry is currently paying the four percent severance tax rate. Mr. Loomis indicated the price of uranium yellow cake reached $19 per pound yesterday. Mr. Loomis indicated the industry has always paid property taxes but there was a severance tax exemption during the time the price of uranium was low.
Mr. Ralph Knode, Power Resources Incorporated, thanked the Committee and the Legislature for their support on the tax break during the bad times of uranium prices. Mr. Knode indicated the price break helped his corporation stay in business in this state.
Mr. Dan Noble, Department of Revenue, provided the Committee with an extensive update on the status of the streamlined sales tax project (see Appendix 9). Mr. Noble indicated the project has made dramatic progress since its adoption.
Following discussion, Representative Pete Anderson moved the Department of Revenue work with the Legislative Service Office to provide the Committee with proposed bill language to update the Wyoming Statutes for the streamlined sales tax project. The motion passed.
Mr. Walden-Newman said it has been six years since he started work on the project of the streamlined sales tax. He feels it is critical Wyoming stay in this ball game since sales tax is so important to the state's revenue picture. He indicated the Committee should review the rules and regulations promulgated by the Department of Revenue to comply with the streamlined sales tax project and should also consider a vendor discount since the vendors are going to be doing the state's business of collecting the sales tax.
Ms. Lynn Birleffi, Wyoming Retail Merchants Association, indicated she supports the streamlined sales tax project (see Appendix 10). She indicated Wyoming is losing large amounts of money in lost revenue due to internet sales. She indicated the streamlined sales tax project should go forward and that this was a question of fairness because it is hard for Wyoming retailers located in a building to compete with large internet vendors.
Mr. Joe McQuade, Chief Financial Officer for Wyoming Woodworker's Supply, indicated he is opposed to the streamlined sales tax project (see Appendix 11 which comprises two articles explaining opposition to the streamlined sales tax project). Mr. McQuade indicated the streamlined sales tax project imposes complex requirements on vendors. He said the idea of fairness is always a concern with taxation issues and there is a fear that actions taken to level the playing field between internet vendors and in-state vendors may make the field more uneven. He said in-state sellers must always charge sales tax while the out-of-state sellers have to charge shipping. Mr. McQuade is concerned since the state may tax businesses which are not located within their boundaries and this may give them authority to reach out and exercise jurisdiction over other areas of businesses. He indicated the cost of compliance and collecting sales tax would cost his company around $200,000 per year. He has not found software that will assist in the collection thus far.
There being no further business, Co-Chairman Cohee adjourned the meeting at 6:15 p.m.
Co-Chairman Cohee called the meeting to order at 8:30 a.m. The order of the meeting generally followed the prepared agenda.
Senator Mockler provided the Committee with a map showing the current motorized roadways in the state of Wyoming (see Appendix 12).
Mr. Ed Schmidt, Director, and Mr. Wade Hall, Ad Valorem Administrator, Department of Revenue, Ms. Casey Parker, Assistant Attorney General and Jim Painter, assistant to Ed Schmidt, explained the issue of assessing intangibles for property taxation and suggested statutory changes (see Appendix 13). Mr. Schmidt explained the current definition of intangible personal property in the Wyoming Statutes includes a list of intangible property. The Wyoming Supreme Court has ruled that since the list uses the word "includes" it can mean other things besides the seven listed items. The department has always maintained the list was exclusive and did not include anything not included in the list. Mr. Schmidt explained intangible property is exempt from property taxation by law and some companies are claiming more items are included in the list than what the statute contains. Mr. Schmidt cautioned this could cost the state a lot of money in lost tax revenues.
Mr. Dan Sullivan provided information on the definition of intangible (see Appendix 14). Mr. Sullivan indicated the state constitution requires that all taxpayers be treated uniformly and equally. He cautioned that changing any rules that would only apply to companies which are state assessed versus locally assessed could create an inequality. Mr. Sullivan suggested there were three alternatives for the committee:
Mr. Walden-Newman indicated that so far this has been a small problem and has not significantly affected Wyoming's tax base. He indicated the problem has been $1 million out of a total of $750 million property tax bill. Mr. Walden-Newman indicated the Committee needs more information from both sides of the issue before it tries to resolve the problem.
Ms. Stacey Sprinkle and Mr. Mike Mupo, Verizon Wireless, gave information on the difficult issue of intangibles and property tax assessment (see Appendix 15). Ms. Sprinkle explained her company has a vested interest in intangibles and her industry is based in large part on intangible property. She expressed concern that companies which provide essentially the same service but which are state assessed versus locally assessed are being taxed unequally. She made three recommendations to the Committee:
Mr. Tom Jones, National Federation of Independent Businesses, expressed concern on behalf of his client organization. He indicated there is difficulty in trying to tax the universe minus the exemptions. He indicated the constitution requires no tax be levied in pursuance of law and that every tax shall state distinctly the object of the same. He indicated the department should know the status quo of what they are taxing now, make such a list, and let the world know what intangible properties they are taxing.
Ms. Liz Zerga, Western Wireless, indicated her company has concerns similar to Verizon Wireless. She indicated a change in technology has made old definitions of intangibles in the law inoperable. She indicated the issue needs further study to decide how to treat intangibles for taxation purposes.
Mr. Loomis is concerned the Department of Revenue, in the future, could expand the list of things that are being taxed that were not taxed in prior years.
Mr. Dave Johnson, Wyoming Banker's Association, indicated there are two sides to this issue. He indicated the basic test of an asset is whether you can borrow against it and how much. He indicated when you try to value a business, you throw out the goodwill and other things to try to get to the true value of that business.
Ms. Erin Taylor, Pacificorp, indicated her industry would be available to help the Committee with this issue.
Following extensive discussion later in the day, Senator Peck moved the Committee form a subcommittee of three legislators, three industry people, and three people from the Department of Revenue to further study the issue of intangibles. The motion passed. The three legislators on the subcommittee will be Senator Mockler, Chairman, Representatives Anderson and Lockhart. Cochairman Cohee asked Senator Mockler to pick the rest of the subcommittee and let the chairman know her selections.
Mr. Temte explained the July 2004 revenue update for the Committee (see Appendix 16). Mr. Temte indicated the July 2004 update indicates the general fund will be up $58.7 million over the projection, severance taxes will be up around $100 million over what was projected, the common school account will exceed projections by $17 million. The bottom line, according to Mr. Temte, is additional revenues over projections will amount to around $148.5 million.
The Committee extensively discussed draft legislation they would like to see.
Senator Erb moved a bill be drafted to reduce sales taxes by one percent. The motion failed.
Senator Mockler moved a bill be drafted to address the cap of severance taxes. She asked a bill be drafted to distribute severance taxes collected in excess of $155 million in any year be distributed as follows:
The motion passed.
Representative Childers asked the Committee to consider 2004 HB 132, "Specific purpose tax-optional procedure." This bill would allow a county which has defeated an election to impose a specific purpose excise tax to pursue an alternative procedure for imposing that tax. The bill would allow a county, a city, or a school district to impose a specific purpose tax for a specific amount. Representative Childers asked the Committee to consider the bill and to discuss it at the next meeting.
There being no further business, the meeting was adjourned at approximately 3:45 p.m.
Respectfully submitted,
Representative Roy Cohee, Co-Chairman